Panera finds clearer sense of core customer

A “deep and thoughtful review” of its position in the marketplace during 2014 has led to a clearer sense of Panera’s core customer, the company’s top executive said during a Feb. 12 conference call with analysts to discuss fiscal 2014 results.

Ron Shaich, chairman and chief executive officer, said Panera studied MyPanera data, demographic data, and utilized a range of external research and strategic resources to better understand what leads customers to choose Panera over other quick-casual restaurant options.

Although he declined to go into the details of the research, Mr. Shaich said Panera’s positioning going forward may be summarized simply: cravable food, an ally for wellness and an elevated experience.

“One component of our evolving positioning is a renewed focus on creating menu items that our customers will crave and walk across the street to purchase,” Mr. Shaich said. “In previous calls, I've shared how well liked our new line of flatbreads have been. Based on customer feedback, we believe flatbreads are helping to drive traffic.

“In our last celebration in 2014, we focused on cravable sandwiches and soups. Specifically we paired our Turkey Chili with our Southwestern Flatbread, two of our most popular menu items. This combination was a big hit.

“In early 2015, we introduced a line of Broth Bowls, including a Soba Noodle Bowl with Chicken and a Lentil Quinoa Bowl. Both bowls, which were an extension of our soup line, are designed to awaken an appetite for adventuresome eating at Panera and appeal to those seeking more healthful menu items.”

In addition to food innovation, Mr. Shaich said Panera is relying on its “sourcing muscle.”

“We are competing against a whole new universe of craft players who are trying to do to Panera what Panera did to casual-dining and Q.S.R. in the last several decades,” he said.

Specifically, he said Panera’s scale gives it the ability to deliver on its progressive food practices.

Later this year and into 2016, Panera will roll out a range of “clean” products, he said, including the introduction of salads made with “clean” dressings later this summer. Panera describes “clean” food as food “that’s simple, natural, unprocessed and whole.”

“I was in the market two weeks ago trying those salads, those salads made with clean dressings,” Mr. Shaich said. “And I’ll tell you right here and now, I was impressed. They are a huge step forward for Panera, and I can’t wait till you get a chance to taste what clean actually tastes like.”

In the year ended Dec. 30, 2014, net income at Panera totaled $179,293,000, equal to $6.67 per share on the common stock, down from $196,169,000, or $6.85 per share, in fiscal 2013. Net revenues for the year were $2,529,195,000, up from $2,385,002,000.

Panera said that “moving pieces” in fiscal 2015 make it difficult to predict precise guidance, but the company indicated that it is targeting full year earnings-per-share growth of flat to down mid- to high-single digits compared with fiscal 2014. The company is targeting company-owned comparable bakery-cafe sales growth for fiscal 2015 of 2% to 3.5%.